Franchise is mainly based on the marketing concept. This concept is mainly adopted by a company or organization for expanding their business. In this business expenditure franchisor (Company Owner) licenses their procedures, business model, intellectual property, brand and right. So that license holder (franchisee) can sell its brand products or services. In the return franchisee has to pay a certain amount of fees to franchisor and also has to agree to comply with certain obligations. These obligations are set out in franchise agreements.
Word Franchise is mainly derived from the Anglo-French word franc, which means free. Franchisor who is using a franchise system this is an alternative business growth strategy. It is compared to the expansions of business through corporate owned outlets or the chain store. While adopting the franchise system business growth strategy for sales and distributions, the goods and the services minimizes the franchisor’s capital investment and liability risk.
Franchising partnership is rarely equal, especially in that case where the franchisee is an individual, in a small privately-held corporation or in an unincorporated partnership. It will also ensure the franchisor about the substantial legal or economic advantages over the franchisee.